With enrolments exceeding 1.09 million international students in 2024, a 15 per cent increase from pre-pandemic levels, Australia’s education sector has firmly re-established itself as a premier destination for global capital seeking stable returns in specialised residential assets.
New South Wales and Victoria continue to dominate the student accommodation landscape, with Sydney and Melbourne universities attracting the highest volumes of international enrolments.
However, Queensland has emerged as an increasingly competitive market, with Brisbane experiencing some of the strongest growth in both student numbers and PBSA investment activity.
Transaction data reveals that Sydney properties command the highest values in the market, while Melbourne follows closely behind. Brisbane, Adelaide, and Canberra represent more accessible entry points for investors with growing student populations.
The sector has seen significant portfolio transactions concentrated in these five major university cities. Global institutional investors have led major acquisitions exceeding $2.3 billion over the past 24 months, with several large portfolios changing hands at cap rates around 5 to 5.5 per cent, demonstrating strong confidence in the market fundamentals despite broader economic uncertainties.
The composition of international student enrolment in Australia has undergone significant shifts in recent years, influencing investment strategies in the student accommodation sector.
While traditional student countries like China remain significant, India has emerged as the fastest-growing origin for international students in Australia.
Southeast Asian nations including Vietnam, Malaysia, and Indonesia have also shown substantial growth, partly influenced by Australia’s geographical proximity and perceived safety compared to alternative destinations like the United States.
The government’s December 2024 shift to “high priority” and “standard priority” visa categories, replacing earlier attempts to cap student numbers, has maintained strong enrolment flows while directing students toward regional and smaller universities.
This policy approach is gradually reshaping the geographic distribution of international students across the country.
Further fuelling international interest is Australia’s universities continuing to make notable gains in global rankings across several disciplines, enhancing the country’s appeal to many international students.
Engineering and technology programs at universities in New South Wales and Victoria have shown particular improvement, while natural sciences and business studies at Queensland institutions have climbed significantly in subject-specific rankings.
The University of Melbourne, Australian National University, and University of Sydney continue to lead in composite rankings, but notable improvements from universities in Western Australia and South Australia are broadening the geographic appeal for international students and, consequently, for PBSA investors looking beyond the traditional eastern seaboard markets.
Rising geopolitical tensions have repositioned Australia as a beneficiary in the global competition for international students. Increasingly restrictive visa policies and political uncertainties in the United States have redirected significant student flows toward Australia, particularly from India and South East Asian nations.
Australia’s relative political stability, transparent visa processes, and post-study work opportunities create compelling advantages over competitor markets.
The recent shifts in United States immigration policy following the 2024 election have accelerated this trend, with an uptick in interest in Australian institutions from students who might previously have favoured American universities.
The Australian student housing market remains relatively underdeveloped compared to more mature markets like the United Kingdom and United States, creating an attractive entry point for experienced offshore investors.
This comparative immaturity has drawn substantial capital from North American, European, and Asian institutional funds seeking to leverage their operational expertise.
Singaporean investors have been particularly active, with sovereign wealth connections and real estate investment trusts deploying significant capital into the sector.
European pension funds have also increased their allocations to Australian student housing, viewing it as a defensive asset class with counter-cyclical characteristics during economic uncertainty.
While capital cities continue to attract the majority of investment, regional universities in New South Wales, Victoria, and Queensland are seeing increased attention from developers and investors.
The government’s visa prioritisation system for regional institutions has improved the investment case for markets that were previously not considered.
Universities in Newcastle, Wollongong, Geelong, and the Gold Coast have experienced stronger international enrolment growth than metropolitan institutions on a percentage basis, albeit from lower starting points. This geographic diversification presents opportunities for investors seeking higher yields than those available in capital cities.
The Australian dollar’s competitive position against major currencies has enhanced the country’s value proposition for education, making tuition and living costs more affordable for international students compared to alternatives in North America and the United Kingdom.
This currency advantage, combined with high-quality education offerings, has strengthened Australia’s appeal despite the nation’s housing challenges.
As Australia’s education sector anticipates continued growth through 2025 and beyond, the student accommodation market represents an attractive investment opportunity both for domestic funds and offshore buying groups.
With the country’s universities continuing to rise in global rankings and international student numbers reaching new heights, the specialised student housing sector in Australia continues to mature into an institutional-grade asset class attracting a growing pool of sophisticated real estate investors.